"We believe that this decision is conducive
to the security of Taiwan and constructive dialogue between the two sides in the future," it said.

However, the Chinese Foreign Ministry said that if the US disregarded China's "solemn representation, it would be a grave violation of China's sovereignty" and a "rude interference in China's internal affairs".

The Chinese state-run Xinhua news agency quoted the Chinese Army newspaper as saying the move would have "suicidal results".

Substantial upgrade

Mr Bush approved the sale of four Kidd-class destroyers, along with eight diesel submarines and 12 anti-submarine planes.

State-of-the-art: Aegis-equipped destroyer

They are expected to be made available from 2003, and will provide a layered defence against China's growing missile and submarine capability.

Taiwan had hoped to receive the sophisticated Aegis missile system, carried by US Arleigh-Burke class destroyers, as part of the package.

But despite Aegis' absence from this deal, the BBC's Tom Carver says the offer represents a substantial upgrade of Taiwan's defences.

President Bush has also hinted that the Aegis system would be made available at a later date if the Chinese military build-up continued.

Chinese fears

Beijing fears the Aegis technology could eventually form part of a regional missile defence system that would provide a shield for Taiwan against China's growing arsenal of short-range ballistic missiles.

China fears Taiwan would use Aegis as part of a missile shield

China considers Taiwan a breakaway province that must be reunited with the mainland.

The BBC Beijing correspondent, Rupert Wingfield-Hayes, says that, although China's initial response is robust, it is far from being hysterical.

He says the measured tone may also reflect relief that the arms package does not include Aegis.

Supplying Taiwan with the Aegis system could have seriously worsened Sino-US relations, already strained by the recent collision between an American spy plane and a Chinese jet.